Gross rent multiplier (GRM)
Price divided by gross yearly rent. It is a quick screening tool for comparing rentals, but it ignores expenses and vacancy.
Also called: GRM, rent multiplier
Related terms
Net operating income divided by the property's price or value. It shows the yearly return before financing and is used to compare properties and estimate value.
A rough screen saying monthly rent should be at least 1% of the purchase price. It is a quick filter, not a full analysis, and is hard to meet in many high-priced markets.
A property's yearly income minus operating expenses, before mortgage payments and income taxes. It is the base number for cap rate and many commercial valuations.
Valuing a property based on the income it produces, often by dividing net operating income by a cap rate. It is used mainly for rentals and commercial property.